A collection agency bond ensures that an agency fulfills its contract in an ethical manner. This bond ensures the agency will properly handle money it receives while pursuing outstanding debts. It also guarantees those funds are routed to the company with the outstanding debt.
If the collection agency misappropriates these funds, the state can file a claim on the agency’s bond. If the claim is determined to be valid, the face value of the bond is released by the surety company and paid by the collection agency.
The following states require a collections agency to get a bond as part of their business licensing process. Each state has specific provisions outlined in the bond that the principal must abide by in order to remain licensed and bonded. Some states utilize the NMLS to electrically file the bond. If the principal acts against the bond, the state has the legally ability to cancel the bond and revoke the business license.
This particular bond type can be referred to by several terms such as Debt Collector Bond, Collection Bond, Debt Collection Agency Bond, and others. The specific term for the bond depends on the state. No matter what the bond name is, the bond type is the same for a collection agency.
If you are looking to get bonded in multiple states, make sure to let your bond agent know. We can take care of all your bonds at once! Below is a list of the states that have a bond requirement for collection agencies. Click on the state and it will link you to the appropriate page to gather more information on the state specific bond requirement. .